RBI said that if the KYC done by payments banks promoted by telecom companies is of the same quality as prescribed for a banking company, bank account can be opened without any document.Pratik Bhakta | ET Bureau | October 07, 2016, 09:17 IST

The Reserve Bank of India has given a fresh nudge to country's financial inclusion drive by allowing payments banks and small finance banks use digital banking to open bank accounts while streamlining their risk mitigating norms to make the experiment of differentiated banking a robust one.

The central bank has also permitted mobile phone users to open bank accounts with the payments banks promoted by telecom companies seamlessly, provided all the KYC (know your customer) formalities are already met.

RBI on Thursday said that both small finance banks and payments banks can open accounts without a wet signature, relying completely on the digital signatures and electronic verification, which makes on-boarding of customers easy for geographically distant places where opening a physical branch might not be viable.

“Allowing digital signatures for account opening should make the process extremely easy which will help us to get more customers within the banking fold,” said Samit Ghosh, managing director, Ujjivan Financial Services.

RBI said that if the KYC done by payments banks promoted by telecom companies such Vodafone, Airtel, Reliance and Idea, is of the same quality as prescribed for a banking company, bank account can be opened without any document.

"It may obtain the KYC details from the telecom company,” RBI said in the operating guidelines it issued for payments banks on Thursday. It has also set the operating rules for small finance banks, allowing to use interest rate futures for the purpose of proprietary hedging.

Payments banks will be allowed to participate in call money and CBLO market as both borrowers and lenders, RBI said.

The regulator said both these structures would need to keep a minimum 15% capital adequacy, in line with the rules for non-banking companies, while regular banks are stipulated to keep 9%.

Payments banks cannot lend and will not take deposits above Rs 1 lakh, the regulator imposed capital requirement norms on them in line with the Small Finance Banks. For both the category of new banks the minimum capital requirement has been fixed at 15%“Since the Payments Banks will not lend and anyway they will be working on wafer thin margins for them to have 15% of their assets locked as minimum capital will be difficult for them,” said Bhavik Hathi, managing director of consultancy firm, Alvarez & Marsal.

While mandating that 25% of the small finance banks’ branches should be in the rural areas within the first year of operation, RBI has allowed their business correspondents to function inter-operably except for opening of savings and current accounts.

RBI said payments banks do not need a base branch for a certain number of BCs as mandated for scheduled commercial banks.